Azelis: 8.2% organic growth in third quarter, but free cash-flow sharply declines
Azelis published third-quarter 2026 results on October 22, 2026, showing an acceleration in organic growth: +8.2% in the third quarter of 2026, compared to +2.8% over the first nine months. The period's revenue of €1,122 million exceeds the consensus estimate average (€1.08 billion).
This recovery in activity comes at a cost to cash. To meet demand, the specialty chemicals distributor increased its inventory levels, and free cash-flow conversion fell to 58.6% in the quarter, down from a much higher conversion rate a year earlier.
The group also recorded a goodwill impairment of €350 million, with no cash impact, related to acquisitions made in the Americas.
Revenue up 8.5% at constant exchange rates, EBITA margin at 10.2%
In the third quarter, revenue reached €1,122 million, compared to €1,015 million a year earlier. The increase was 10.6% on a reported basis and 8.5% at constant exchange rates, comprising 8.2% organic growth and 0.3% from acquisitions. Over nine months, sales amounted to €3,288 million, up 4.9% at constant exchange rates.
Quarterly gross profit reached €263 million (+8.8% at constant exchange rates), for a gross margin of 23.4%, compared to 23.3% a year earlier. Adjusted EBITA rose from €98 million to €114 million, or +14.6% at constant exchange rates, of which 14.3% was organic.
The adjusted EBITA margin stood at 10.2% compared to 9.7%, an increase of 54 basis points at constant exchange rates. According to the group, sales growth offset broad cost inflation. Over nine months, adjusted EBITA reached €347 million (+6.1%) and its margin remained at 10.5%.
Industrial chemicals surge sharply, working capital needs weigh on cash
The quarter's growth primarily came from industrial chemicals: €451 million in sales, up 21.0% at constant exchange rates (of which 20.2% organic). Life sciences, the leading division with €671 million, grew by 1.5%. In the EMEA region, this division declined 3.1% to €290 million, while industrial chemicals increased 29.1% to €209 million.
This shift in the mix affects margins: in EMEA, gross margin fell from 25.4% to 24.2%, a decline of 127 basis points attributed mainly to the stronger contribution from industrial chemicals. The Americas posted adjusted EBITA of €48 million (+19.2% organic) and Asia-Pacific of €21 million (+26.1%).
On the cash front, quarterly free cash-flow fell to €67 million, compared to €142 million a year earlier. Over nine months, it reached €190 million (−35.2%), for a conversion rate of 54.4% compared to 87.1%. The working capital requirement to revenue ratio rose to 17.2% at end-September, compared to 16.0% in June and 14.1% in December 2025, mainly due to higher inventory levels (59 days, compared to 58 in June and 51 in December).
Net debt stands at €1,640 million, for a leverage ratio of 3.46 times, compared to 3.44 times in June 2026.
Annual target maintained following €350 million impairment in the Americas
The €350 million impairment primarily relates to goodwill from acquisitions made in the Americas between 2021 and 2023. Arising from the annual impairment test, it reflects, according to the group, a decline in the recoverable value of certain companies in a context of lower market valuations. It reduces goodwill, equity and published net income, with no direct effect on cash, working capital requirements or net debt. The EMEA and Asia-Pacific regions are not affected.
Azelis maintained its target of positive organic growth in adjusted EBITA for the 2026 fiscal year, while noting that volume growth varies by end market and volatility remains elevated. Chief Executive Officer Anna Bertona noted that several recovery signals observed earlier in the year have been confirmed.
Over the medium term, the group reaffirmed the targets presented on September 29 for 2026-2031: single-digit annual gross profit growth in the medium-to-high range, high single-digit adjusted EBITA growth, a doubling of earnings per share and ROCE exceeding 11.5% by 2031. Over the first nine months of 2026, organic growth in adjusted EBITA stood at 3.1%.
